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Jim Lentini: Health care reform will affect retirees

Business Commentary

Posted: May 24, 2010 5:57 p.m.
Updated: May 25, 2010 4:55 a.m.
Fifth in a series

As you know, many people underestimate how much money they need to finance their retirement, especially given that men and women are living approximately 10 (men) and 12 (women) years longer than just 60 years ago.

What does this mean for Americans planning for their future retirement, and what they are now facing in costs by the newly enacted health care bill? Added to this issue is a recent report by the Lewin Group that estimates an increase in costs of about $800 a year for the healthiest people, subsidies for those who can't afford insurance through the exchange and increased costs and taxes for those who can afford coverage.

This and many other problems face the implementation of the new health care bill, according to the experts evaluating the plan as it exists today.

Accordingly, the reports reviewed state that the new law faces major political problems.
Social Security and Medicare became hugely popular - almost untouchable - once Americans started seeing the benefits. But this health care law will directly subsidize only a fraction of the population.

Health care premiums and out-of-pocket costs are growing fast, and this bill would, at best, merely slow that growth. In 2012, premiums will be higher than they are today, it is estimated.

Remember in a previous article quoting the report from the Medicare office of the actuary, Chief Actuary Richard Foster concluded an estimated 23 million people would remain uninsured in 2019.

What does reform fail to fix?

In the four years until the exchanges launch, the feds, 50 states and a lot of private insurance companies will have to do a lot of heavy administrative lifting.

"The technical challenges are formidable," said economist Henry Aaron of the Brookings Institution. There is an even bigger challenge ahead that the new law only begins to tackle - figuring out how to get a grip on exploding health care costs. This law can't work in the long run otherwise.

"When you expand coverage in a meaningful way, cost control inevitably ends up on the agenda," said Jonathan Oberlander, who teaches health policy at the University of North Carolina. Rising private insurance premiums, for example, could steadily erode the impact of the subsidies, forcing Congress to spend more.

After four articles about this health care bill that is affecting our way of life, and since health care is so important to everyone, I thought this would be the last article regarding its issues.

But as it appears that our leadership has put the cart before the horse, it is important to report what experts say about the impending issues and costs. This way, we who pay the bills will know what we are dealing with, how to prepare for it and how to pay
for it. Remember, it's not just this law that's at stake. It's the American economy, what Americans want for freedom of choice, the law's affect on our future security, freedom to control our lives and our retirement planning.

Jim Lentini, CLU, ChFC, IAR is president of Lentini Insurance & Investments Inc. His column reflects his own views and not necessarily those of The Signal.


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